Courts Crack Down on False Asbestos Claims

Asbestos cases, and other toxic tort litigation, have been plagued by false claims, including inconsistent claims by a single claimant to different parties. In a widely-watched case (Kananian v. Lorillard), an Ohio court last week sanctioned a plaintiffs' law firm for filing a false proof of claim with an asbestos bankruptcy trust and associated misrepresentations. The case is likely to have national repercussions.

Plaintiffs claimed in the Ohio suit that the decedent's illness was caused by asbestos in Kent cigarette filters. But plaintiffs had filed a proof of claim with the Johns-Manville asbestos bankruptcy trust asserting that the illness was predominantly caused by exposures to Johns-Manville products that did not happen. Plaintiffs' counsel first tried to exclude the proof from evidence in the civil trial, then said the proof was accurate, even while preparing an amendment. Discovery revealed that counsel had filed inconsistent and inaccurate claims with other trusts as well. Counsel also tried to persuade a trust to resist discovery of the claim filed there. The Ohio court disqualified counsel, a firm with a nationwide practice and a particularly large number of cases in its home state of California. There has been at least one request for further discipline of the attorneys by the California state bar. 

Gordon & Rees won a California appellate decision last year, against the same plaintiffs' firm, affirming the right of defendants to discovery of claims and other documents submitted by a plaintiff to an asbestos bankruptcy trust. (Volkswagen of America, Inc. v. Superior Court (2006) 139 Cal.App.4th 1481.) The purposes of such discovery include to determine whether a plaintiff (usually through lawyers) tells a different story to such trusts about his exposures than asserted in the lawsuit. The incentive and opportunity are present. Asbestos bankruptcy trusts are controlled by asbestos plaintiffs' lawyers. The trusts dole out millions of dollars, on showings significantly easier than required in court proceedings and in a process largely shielded from public view. Greater transparency will help prevent fraud on the courts and defendants.

The Kananian and Volkswagen decisions should both discourage such duplicity in the future and give defendants the ability to uncover it.

Click here for a copy of the Ohio order.