July 31, 2013

CHARLOTTE, N.C. (Legal Newsline) – Legal Newsline’s efforts to keep a North Carolina bankruptcy trial open to the public have failed.

U.S. Bankruptcy Judge George R. Hodges had closed the courtroom to the news media and the public during a portion of a law professor’s testimony last week in the bankruptcy case filed by Garlock Sealing Technologies.

Attorneys for Legal Newsline filed a motion Tuesday to keep the entire trial open to the public.

On Wednesday, Hodges denied Legal Newsline’s motion, saying none of the seven orders previously entered in the case relating to confidentiality of documents had been challenged by Legal Newsline or anyone else. Nor did Legal Newsline appear with respect to a motion by Garlock, which Hodges denied, to remove the confidentiality designation from certain documents.

Hodges did not assert that any of those orders or that motion concerned closure of a hearing from the public. Last Friday, July 26, was the first time during the trial that the courtroom had been closed. After denying the motion early Wednesday, Hodges went on to close a portion of the trial again later in the day.

The judge’s ruling denying Legal Newsline’s motion stressed that the trial, which will determine the estimated liability of Garlock for current and future asbestos claims, was not a dispositive proceeding and was merely a preliminary step in the formulation of a plan of reorganization.

According to Hodges’ order, some of the subjects of testimony from which the news media and the public will be required to leave the courtroom include:

* The different sources of asbestos to which particular plaintiffs were exposed. That testimony would apparently address the extent to which plaintiffs were exposed to asbestos from Garlock products and other sources.

* How law firms identified and analyzed products to which their clients were exposed.  That testimony would apparently bear on the basis for law firms to assert claims against Garlock and/or other manufacturers of products containing asbestos.

* The process by which law firms were retained by clients. That might show, for example, if clients were enlisted through television or internet advertising.

* The sources of cases referred to law firms that brought claims against Garlock.

* The extent of the law firms’ pre-filing investigations and how they responded to discovery.  That would apparently include testimony bearing on Garlock’s allegation that some law firms concealed information about their clients’ exposure to asbestos from non-Garlock sources.

* The questions the law firms asked their clients in responding to discovery.

* How law firms approached settlement negotiations.

Hodges had excluded members of the media and public from a portion of the testimony given by Lester Brickman, a professor of law at Benjamin N. Cardozo School of Law at Yeshiva University in New York. Brickman, an expert witness retained by Garlock, was testifying about trust provisions meant to protect confidentiality that he says allowed for rampant claimant abuse and fraud in asbestos settlements.

Brickman had been testifying during the open portion of his testimony about certain confidentiality provisions pertaining to trusts established to pay claimants who came into contact with asbestos. The provisions caused significant transparency issues preventing Garlock from cost-effectively ferreting out bogus claims.  Brickman authored a report on fraudulent asbestos claims and has testified before Congress on the issue.

Legal Newsline reporter present at the trial objected to the closure, requesting that the judge delay Brickman’s testimony until after the company’s lawyers had a chance to argue for full media and public access to all of Brickman’s testimony. Hodges overruled the request and ordered the news media and public to leave the courtroom for the rest of Brickman’s testimony, which continued for another three hours.

The bankruptcy trial, which began last week at the U.S. Bankruptcy Court for the Western District of North Carolina, is expected to last three weeks.

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