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X-NO-ARCHIVE: YES
[Justice Scalia should take note of this.]
Appeals Court Orders Judge to Step Aside
in Three Asbestos Cases
By MILT FREUDENHEIM
The judge overseeing five important asbestos-related
bankruptcy proceedings was ordered to withdraw from
three of the cases because of the appearance of bias.
Legal experts said the decision would probably force
new delays and might cause far-reaching economic
repercussions in the long-running litigation, which
involves thousands of people who say they were harmed
by exposure to asbestos.
In a 2-to-1 decision, a panel of the United States
Court of Appeals for the Third Circuit in Philadelphia
ordered Alfred M. Wolin, a federal district judge in
Newark, to end his role in the bankruptcy hearings
involving W. R. Grace, Owens Corning and U.S. Gypsum
because his handling of the cases had the appearance of
bias.
But the three-judge panel said Judge Wolin had not, in
fact, "done anything wrong or unethical or biased." The
appeals judges said they would decide later whether to
remove him from a fourth case involving Armstrong
World, which had asked to be included in any withdrawal order.
Legal experts called the order highly unusual in civil
legal proceedings and said it would be up to Judge
Wolin to decide whether to continue overseeing the
fifth case, involving Federal-Mogul Global, which was
not immediately involving in the ruling.
The ruling was requested by Kensington International
Ltd., which bought $275 million in Owens Corning bank
debt soon after the company sought bankruptcy
protection, and Springfield Associates, another holder
of distressed debt.
Lawyers for the creditors objected to meetings that
Judge Wolin conducted with plaintiffs' lawyers and
other parties to the case without a record being made
for those who were absent. The meetings "were flawed
because no opportunity existed for their adversaries to
know precisely what was said" and what effects might
result, the court said.
The creditors also argued that the judge had appointed
advisers who were not impartial because they
represented plaintiffs in a similar bankruptcy case in
Newark involving a company called G.I. Holdings Inc.
The court noted that the judge and his advisers met
with asbestos plaintiffs' lawyers for 325 hours over
several years.
The court said two of the advisers, David R. Gross and
C. Judson Hamlin, had a conflict of interest because
they represented individuals with asbestos claims
against G.I. Holdings. The court said there was a
"close relationship between the future asbestos
claimants and the issues in the five asbestos cases"
before Judge Wolin and the G.I. Holdings case.
Judge Leonard I. Garth, who wrote the order for the
appeals panel, was joined by Judge D. Brooks Smith.
Judge Julio M. Fuentes dissented, saying that he did
not agree that Judge Wolin's advisers, Mr. Gross and
Mr. Hamlin, "had a conflict of interest."
Judge Wolin did not comment on yesterday's ruling. Last
February, he issued a 102-page opinion denying motions
seeking his withdrawal.
Lawrence Robbins, a lawyer for Kensington, said seeking
the withdrawal of Judge Wolin was risky. "It is unusual
for a judge to be recused," he said. "It is unusual for
a litigant to seek a judge's recusal. Litigants don't
do it lightly. Something must be really quite wrong."
The debtholders sought to force Judge Wolin to withdraw
after he decided to consolidate the future treatment of
commercial creditors together with individual claims.
That would have reduced the company's money available
to pay debt and increased the potential for fees for
plaintiffs' lawyers, a legal expert said.
"He was deciding critical issues very much in the
interests of plaintiff lawyers," said Lester Brickman,
a professor at the Benjamin N. Cardozo School of Law at
Yeshiva University, who has studied asbestos
litigation.
Mr. Robbins predicted that the case "will move along
now," but other lawyers said the cases would be delayed
by a year or more.
Judge Wolin was originally given responsibility for the
five asbestos cases in 2001 by the chief judge of the
appeals court in Philadelphia. The panel referred the
future oversight of the three cases to the current
chief judge.
The dispute involving Judge Wolin has already led
plaintiffs' lawyers to increase their settlement
demands significantly in many other cases involving
companies that are not in bankruptcy proceedings to
make up for the delay in resolving the five cases, Mr.
Brickman said.
Companies have already paid more than $70 billion in
asbestos claims, by some estimates, with insurance
companies paying one-third to one-half of the total.
There have been 8,400 defendants in "tens of thousands
of suits," said Stephen Carroll, a senior economist at
the RAND Corporation research center in Santa Monica,
Calif. Besides asbestos mining and products companies,
defendants have included air-conditioning and heating
companies, specialized contractors and water transport
companies, he said.
Legislation to create a no-fault trust fund to
compensate victims of asbestos-related diseases is
stalemated in Congress. Advocates of the legislation
say that more than 70 companies have been forced into
bankruptcy by lawsuits.
http://www.nytimes.com/2004/05/18/business/18asbestos.html?th
Copyright 2004The New York Times Company
Posted by Permission
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LP
In politics, moderation is the best policy.
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