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In a precedent-setting settlement deal with future asbestos claimants, Garlock Sealing Technologies agreed to pay nearly $360 million over the course of the next four decades. However, the actual amount available to future claimants will be closer to $236 million, after tax deductions and settlements of certain claimants who filed pre-petition.
That amount is nearly double what a bankruptcy judge estimated the firm’s liability to be – about $125 million for current and future claimants as of January 2014. However, it’s still only a small portion of the $1 billion sought by plaintiff attorneys.
The company for years made gaskets that contained chrysotile asbestos routinely used in pip insulation.
Attorneys for the manufacturer have repeatedly asserted that liability should be lessened because chrysotile asbestos is less dangerous, despite the fact scientists have determined no form of asbestos is safe. Those who came in contact with chrysotile asbestos have been sickened with terminal mesothelioma cancer, just like those who were exposed to other types of the material considered more dangerous.
For Garlock, the ultimate goal is to be released from its current bankruptcy filing. By establishing a fund from which to cover liabilities stemming from asbestos exposure illness, it can reorganize and continue to operate.
However, the settlement deal may end up pitting attorneys for current claimants against those representing the interests of future victims who have not yet filed. Until now, they have largely presented a united front against Garlock. Now, they will be in competition for a finite amount of money.
The settlement agreement indicated future claimants must provide the following criteria:
- Documentation of complete work history;
- Evidence of exposure to Garlock products in particular; and
- Documentation of claims filed with bankruptcy trusts established by other asbestos product manufacturers.
The goal is to minimize the amount plaintiffs can secure from Garlock. Payouts from other bankruptcy trusts will limit the amount available to claimants. This is despite the fact that many plaintiffs legitimately can claim damages from multiple manufacturers.
The settlement agreement also stipulates that any future claimant who rejects the settlement and instead pursues personal injury litigation will need to proceed with their claim through the North Carolina bankruptcy court that oversaw the firm’s filing. That court will rule on pretrial discovery and case management. A total of $130 million has been set aside for this purpose.
Approval of the reorganization plan and settlement won’t be final until later this year, and it’s expected that attorneys for current and future claimants will continue arguing for a more substantial settlement amount.
What’s especially troubling is that a number of companies with pending bankruptcy lawsuits stemming from an influx of asbestos-related disease claims have been closely watching this case. Ultimately, they are developing legal strategies that will help them dispute future claims and limit payouts even when liability is proven.
Our experienced mesothelioma lawyers are dedicated to fighting for the rights of injured workers.
Help for mesothelioma victims can be found at The Ferraro Law Firm by calling (888) 554-2030. Offices in Miami and Washington, D.C.
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