If the road to hell is paved with good intentions, one can only imagine where bad intentions send you. For the asbestos industry, it’s probably to the Western District of North Carolina.
Back in 2014, a Western District of North Carolina judge – in his first and only asbestos case – decided to reduce by 90 percent the amount Garlock Sealing Technologies owed its victims, including more than 4,000 Navy service members. Garlock was one of the world’s largest asbestos-containing gasket and packing manufacturers and had poisoned workers for many years. (See more here.)
To strip these victims of compensation, the judge made some highly irregular and incorrect rulings about how to value damages. Soon after he ruled, evidence surfaced that Garlock had “hid evidence from the bankruptcy court and presented false testimony, .... [committing] a fraud upon the court.’” And soon after that, Garlock’s case fizzled, with Garlock and its parent settling with victims for almost four times as much as the judge had ordered and completely dropping its bogus attacks on victims’ attorneys.
But the asbestos industry was still delirious with excitement over this discredited judge’s opinion. They saw in it new opportunities to scam even more dying victims, and Koch Industries stepped right up. Koch’s subsidiary, Georgia-Pacific, made asbestos-containing drywall, which poisoned hundreds of thousands of people. Rather than continuing to pay dying victims what it owed, GP divided itself in two: Company #1 kept all the assets and no liabilities, and Company #2, with no employees, no operations, and no assets, kept all the liabilities, including asbestos claims. That second company became headquartered in North Carolina. And then, in the land of Garlock, it declared bankruptcy and argued that victims who deserved full compensation – which a company like Koch could clearly afford - should get pennies on the dollar.
Other companies followed suit. For example, in January, CertainTeed cement company, which made all kinds of products that poisoned workers with asbestos (including Navy service members), similarly divided itself in two. All the assets (and none of the liabilities) were transferred to CertainTeed LLC and affiliates. All the asbestos liabilities (and none of the assets) were transferred to “DBMP,” a company with an unrecognizable name that domiciled in North Carolina. With no assets, DBMP immediately rendered itself insolvent and it filed for bankruptcy in January.
We can only hope that a judge somewhere refuses to allow a fraud like this to go on. But we do have to hand it to the asbestos industry. There seems to be no bottom to the scams they’ll devise to avoid compensating their dying victims. And when I say no bottom, I mean all the way down there. The place where flame-retardants won’t help.
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