Existing law provides generally for procedures governing civil actions. Existing law imposes additional procedures that apply with respect to limited types of civil actions.

This bill would enact the Asbestos Tort Claim Trust Transparency Act, which would establish additional procedures with respect to civil actions pertaining to asbestos tort claims, as defined. The bill would, among other things, require that a plaintiff disclose specified information with respect to any asbestos trusts, as defined, against which the plaintiff has or could pursue a claim, and entitle a defendant to discovery with respect to relevant information pertaining to the plaintiff held by other asbestos trusts and to pursue various motions.

This bill would require a plaintiff to serve certain sworn statements. By expanding the scope of an existing crime, the bill would impose a state-mandated local program.

Existing law authorizes certain parties to petition the court for preference, and, if the court grants a motion for preference, requires the court to set the matter for trial not more than 120 days from the date the motion for preference is granted.

This bill would provide that a party to a civil action who is a veteran, as defined, is entitled to preference ahead of all parties who are not veterans.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Date of Hearing: January 9, 2018

ASSEMBLY COMMITTEE ON JUDICIARY

Mark Stone, Chair

ABPCA Bill Id:AB 1056

Author:(Kiley) – As Introduced Ver:February 16, 2017

SUBJECT: ASBESTOS TRUST TRANSPARENCY ACT

KEY ISSUES:

1. should asbestos victims be subjected to additional procedural requirements in order to file an asbestos tort action?
2. Should plaintiffs bringing an asbestos tort claim be denied a trial preference to which they would otherwise be eligible, unless they meet the additional procedural requirements established by this bill?
3. Should an asbestos tort victim be denied the right to claim privilege or confidentiality to a defendant's request to discover trust claim documents?
4. SHould veterans be entitled to a trial preference ahead of all parties who are not veterans, regardless of another Party’s age or health condition?

SYNOPSIS

Asbestos is a naturally-occurring mineral that was previously used in a wide variety of industrial, commercial, and household products, largely because of its flame retardant and insulating properties. Asbestos was associated with occupational diseases by the early 20^th century, and by 1960, the connection between asbestos and mesothelioma, a particularly aggressive form of cancer, was clearly established. Beginning in the 1970s and continuing to the present, several manufacturers of asbestos were sued for the harm and death caused to victims exposed to the product. To date, about 100 companies have filed bankruptcy largely due to their liability for asbestos-related illnesses. As part of Chapter 11 bankruptcy, many of those companies established "asbestos trusts" that set aside funds to be used to pay future claimants; in exchange, the company would be released from civil tort liability. This means that asbestos victims have two means of obtaining compensation: they can file a claim with an asbestos trust if exposed to the product of a bankrupt company, or they can file a civil action in tort against a solvent company. Because many victims were exposed to multiple products produced by different manufacturers, an asbestos victim may rightfully bring both a civil action and file a claim with a trust.

The author of this bill believes that plaintiffs are abusing their right to use this two-track system and effectively "double-dipping" – that is, suing a solvent company while denying exposure to the product of a bankrupt company, but then, after winning a judgment, also filing a claim with a trust, even though it may have denied exposure to that product in the civil trial. In order to address this alleged problem, this bill would impose several new procedural requirements on plaintiffs in asbestos actions, including a requirement that a plaintiff disclose information related to any past trust claims or intended future claims. In addition, as a precondition to bringing a civil action, the bill would require a plaintiff to file claims with any trust with which the defendant reasonably believes the plaintiff has a claim. In addition – and perhaps most remarkably – the bill would prevent a dying asbestos victim from obtaining a trial preference to which he or she is otherwise entitled, unless the plaintiff meets all of the additional requirements of this bill. The bill also singles out asbestos plaintiffs in other ways, such as denying an asbestos plaintiff the right to claim privilege or confidentiality in response to discovery requests that relate to the trusts.

As noted in the analysis, this bill singles out asbestos victims by imposing upon them several new and unusual procedural requirements. The analysis concludes that, in light of the uncertain evidence of any significant problem of "double-dipping," the Committee may wish to consider whether new requirements are unnecessary in light of existing remedies for the alleged problem. The bill is opposed by the Consumer Attorneys of California and several labor organizations who argue that this bill is anti-worker, anti-consumer, and ultimately designed to prevent or delay terminally ill asbestos victims from bringing civil actions.

SUMMARY: Establishes additional procedural requirements for asbestos tort claims and denies otherwise available trial preference to asbestos victims unless they meet the additional procedural requirements established by this bill. Specifically, this bill:

1. Prohibits the court from granting an otherwise available trial preference to a plaintiff in an asbestos tort action, as defined, unless the plaintiff submits a sworn affidavit stating both of the following:
   1. The plaintiff complied with the additional disclosure requirements established by this bill.
   2. The plaintiff made a good faith effort to determine if there are any asbestos trusts against which the plaintiff has a basis to make a claim and, if there is such a basis, that the plaintiff has made claims with all of those asbestos trusts.
2. Specifies that a veteran, as defined, shall be entitled to a preference ahead of all parties who are not veterans.
3. Requires a plaintiff in an asbestos tort claim to serve a sworn statement identifying each asbestos trust claim and, for each claim, whether there was a request to defer, delay, suspend, or toll the claim. Specifies that the sworn statement shall state the dollar amount that the plaintiff has requested and received for each asbestos trust claim. In addition, the plaintiff must provide all asbestos trust claim documents within 90 days of filing the complaint, or within 30 days of filing the complaint if the plaintiff is seeking a trial preference. Requires the plaintiff to supplement the information and materials served, as specified, and authorizes the court to require disclosures in addition to those required by this bill.
4. Permits a defendant in an asbestos tort action to seek discovery of relevant materials from any asbestos trust and prohibits the plaintiff from claiming privilege or confidentiality to bar that discovery. Specifies that asbestos trust documents shall be admissible, without limitation, to prove alternative causation for a plaintiff's injury or to apportion fault for plaintiff's injury.
5. Provides that if the defendant identifies an asbestos trust that the plaintiff failed to disclose and which the defendant reasonably believes the plaintiff has a viable claim, then the defendant may file a motion to require the plaintiff to file a claim against all such trusts and to stay the action or vacate the trial until such claims are filed. Specifies that absent new evidence of exposure to other asbestos products the defendant shall only file one motion naming all of the relevant trusts. If the plaintiff successfully opposes the defendant's motion, the court may award attorney's fees and costs, as specified.
6. Requires the court to stay an asbestos tort action, decline to set a trial date, deny a motion for preference, vacate or continue a trial date, or impose any other remedy in the following circumstances:
   1. Identification of an asbestos trust against which the plaintiff has a basis to file a claim but has not filed a claim.
   2. Failure of the plaintiff to serve disclosures required by this bill.
   3. Upon granting the defendant a motion pursuant to 5) above.
7. Requires the plaintiff in an asbestos tort action to serve, between 60 and 120 days after entry of judgment, a sworn statement identifying each asbestos trust claim the plaintiff has filed, the dollar amount the plaintiff has requested and received from each trust claim, and a statement that the plaintiff has filed all viable asbestos claims and that no additional trust claims will be subsequently filed.
8. Provides that damages awarded in an asbestos tort action shall be reduced by the amount received by or on behalf of a plaintiff from an asbestos trust, and by the amount paid by other defendants, as provided in existing law.

EXISTING LAW:

1. Requires a court to grant a trial "preference" to a party in a civil action who is over 70 years of age and in poor health, as specified; the preference generally requires the court to set the matter for trial not more than 120 days from the granting of the motion. Permits a court, at its discretion, to grant a motion for trial preference if a party suffers from an illness or condition that could cause the party to die within six months and if the court finds that justice will be served by granting the preference. (Code of Civil Procedure Section 36.)
2. Provides that where a release, dismissal, or covenant not to sue or not to enforce judgment is given in good faith before verdict or judgment to one or more of a number of tortfeasors claimed to be liable for the same tort, it shall not discharge any other such party from liability, but it shall reduce the claims against the others in the amount stipulated by the release, dismissal, or covenant, as specified. (Code of Civil Procedure Section 877.)

FISCAL EFFECT: As currently in print this bill is keyed fiscal.

COMMENTS: This bill seeks to address alleged abuse of the two-path system by which persons who are harmed by asbestos exposure may recover damages. One path allows the asbestos victim to file a traditional tort action and seek redress through the civil court system. A second path allows the asbestos victim to file a claim with one of several "asbestos trusts" established under federal bankruptcy law. Many of the largest and most culpable asbestos manufacturers faced such massive liability for the tragic number of persons suffering from mesothelioma and related diseases that they were forced to file bankruptcy. The asbestos trusts – known as "524(g) trusts" for the relevant code section – were established as part of Chapter 11 bankruptcy reorganizations. (11 USC 524(g).) To avoid continuing tort litigation, the trusts are designed to pay any liabilities of the bankrupt company. As part of the bankruptcy organization, a court estimates the company's aggregate liability and sets aside a fund for resolution of present and future asbestos-related claims. (See e.g. In Re Garlock (2014) 504 B. R. 71.) How much each claimant will receive depends upon the amount of the fund and the number of estimated claimants. As a general rule, this amount is much less than a plaintiff would receive in a tort action; on the other hand, the procedure for obtaining payment through the trust is much simpler and avoids the time and costs of litigation. As of 2011, the 524(g) asbestos trusts had paid at least $17 billion in claims by persons injured or killed by asbestos. (U.S. GAO, Asbestos Injury Compensation: The Role of Administration of Asbestos Trusts. Report to the U.S. House of Representatives Committee on Judiciary; hereafter GAO Report.) Because asbestos claims often involve multiple tortfeasors, it is possible for an asbestos victim to have claims against more than one company, one of which may be solvent and another which is bankrupt.

The author and sponsor contend, based on very limited evidence, that asbestos plaintiffs and their lawyers are abusing this dual track system by fraudulently seeking double-recovery ("double dipping") through the two systems. Most notably, the author and sponsor claim that plaintiffs are failing to disclose (or even lying about) exposure to the products of bankrupt companies so that the amount owed by the company that they have sued will not be reduced accordingly. Some of those plaintiffs then, the author and sponsor allege, subsequently file claims with those very same trusts. The author and sponsor believe that more "transparency" – that is, requiring the plaintiff to provide more information about past or possible future trust claims as a condition of bringing an action – will address this alleged abuse. Opponents of this bill question the extent to which this alleged "double dipping" is happening in California. Moreover, opponents contend that the "true intent" behind this bill is not to provide transparency, but to delay cases until plaintiffs die. If the plaintiff dies before trial, then the non-economic damages (i.e. pain and suffering) die with the plaintiff.

This analysis does not opine on the motives behind the bill, but it does conclude that there is not sufficient evidence of a problem to justify subjecting all asbestos victims to the very substantial hurdles required by this bill. As noted in the analysis, if plaintiffs are indeed deliberately failing to disclose information about exposure to trust products, there are other means to address this: sanctions (and perhaps even disciplinary action by the State Bar) against attorneys who engage in such practices; case management orders, already in use, which require plaintiffs to provide information about past and future trust claims; and existing methods of discovery and investigation. The question for the Committee is whether the alleged fraudulent activity by an undetermined number of bad actors is substantial enough that these existing methods need to be supplemented by new procedural requirements that will adversely affect all asbestos plaintiffs.

This bill creates unprecedented procedural requirements for a single, and particularly vulnerable, group of plaintiffs. Plaintiffs bringing an asbestos tort action are, invariably, persons who are dying of mesothelioma or some related asbestos-induced disease. Because most of the exposure occurred years ago and the onset of mesothelioma usually occur decades after exposure, many of the victims are also elderly. In some cases, the plaintiff may have already died, and the case may be initiated by spouses or family members alleging wrongful death. The first section of this bill amends a provision in the Code of Civil Procedure that permits elderly and dying patients an expedited "trial preference." The purpose of this provision is fairly obvious: if there is already a chance that the plaintiff will not survive the duration of a trial, the court will grant a trial-order "preference" and set the trial as early as possible.

This bill, however, would provide that asbestos victims – alone among all other plaintiffs – must meet a number of additional procedural requirements before they could be granted a trial preference to which they are otherwise entitled because of age or terminal illness. Specifically, a dying asbestos victim would need to submit a sworn statement that he or she has complied with the new disclosure requirements established by this bill. This may be unnecessarily burdensome on its own. To begin with, if the plaintiff has previously submitted an asbestos trust claim, the plaintiff must identify those trusts, state the dollar amount claimed and received, and submit all asbestos claim documents. (AB 1056, p. 5, lines 7-31.) Where a plaintiff has already filed a trust claim, this requirement may not be particularly onerous and, indeed, many courts, through case management orders, often already require the plaintiff to provide this information. (LAOSD Asbestos Cases, Case Management Order, Case No. JCCP 4674, Los Angeles Superior Court; hereafter LAOSD CMO.)

However, proposed new Section 824 of this bill (p. 4, lines 5-25) allows the defendant to identify any trusts with which the defendant "reasonably believes" that the plaintiff has a viable claim, and it then authorizes the defendant to file a motion requiring the plaintiff to file claims against all such trusts. The motion, if granted, requires the court to stay the action until such claims are filed. Where such a motion has been granted, the court shall also stay the action, decline to assign an initial trial date, and "deny a motion for preference." (p. 6, lines 26-38, and p. 3, lines 28-29.) In short, a dying asbestos victim could not be granted a trial preference until it had filed claims with all of the asbestos trust which the defendant believes there is a viable claim. These additional filing requirements – initiated at the prompting of the defendant – seemingly defeat the purpose of the trial preference by delaying both the filing and the granting of the plaintiff's motion. Such a requirement—basically allowing the defendant to unilaterally delay the progress of the plaintiff’s case—would seem unfair and onerous to any plaintiff, but could be seen as particularly cruel to a person dying of mesothelioma who is entitled to a trial preference.

The bill would also single out asbestos plaintiffs by denying them the right to assert privilege and confidentiality in response to a discovery request. This bill would provide that a defendant in an asbestos tort action "may seek discovery of relevant materials from any asbestos trust that concerns the plaintiff" and, more remarkably, would provide that "the plaintiff may not claim privilege or confidentiality to bar discovery." (p. 5, lines 32-38.) It is not clear why an asbestos victim, again seemingly alone among all plaintiffs, would not be entitled to assert privilege or confidentiality if the requested materials were in fact privileged or confidential. It may well be the case that documents filed with an asbestos trust would not likely contain privileged or confidential information, but if they did, then the plaintiff should be entitled to assert such a privilege. The court may or may not grant the plaintiff's request, but the plaintiff should at least be allowed to assert it. In addition to this unprecedented denial of the plaintiff's right, the discovery provision in this bill is either redundant or ineffective. According to the GAO Report cited above, a defendant can already use discovery to require the plaintiff to turn over non-privileged information that was filed with a trust. (GAO Report, p. 24-26.) If, on the other hand, asbestos trusts do not grant discovery requests (as the proponents of this bill believe), this bill cannot make them do so. The trusts and their procedures are established by federal law, which is not subject to state legislation. While there seems to be some debate about the extent to which the trusts respond to discovery requests, it is not clear how this bill will change anything in that regard. If the trusts grant such requests, then the bill is unnecessary and redundant. If the trusts do not grant such requests, because of federally dictated procedures, then state legislation cannot change that.

"Double-Dipping is a Misnomer. The proponents primary charge of "double-dipping" creates a false impression that if plaintiffs recover damages in a civil tort suit and then file a claim with an asbestos trust, then they are somehow recovering more than that to which they are entitled. However, as the author and proponents themselves assert as a central part of their argument, more than one company or employer may be responsible for the plaintiff's exposure and subsequent harm. Indeed, the federal legislation establishing the 524(g) asbestos trusts recognizes this by requiring the bankruptcy court to determine the bankrupt company's proportion of fault in order to determine the fixed amount that the trust will pay to claimants.

In addition, the amount paid by the trust is typically much less than the amount of damages suffered; some trusts pay as little as 6% of the damages claimed, while a Rand study found a median payout of 25%. (GAO Report pp. 21-22.) Therefore, if a solvent company was also partly responsible for the recovery, then the plaintiff would justifiably seek damages for that company's portion of the fault in the civil tort action. This would not be "double-dipping;" this is making the victim whole, which, after all, is the primary purpose of tort law. If an asbestos victim recovered the entire amount of damages from multiple tortfeasors, this would indeed constitute "double-dipping." But obtaining 6% of damages from an asbestos trust and the remainder from a solvent company that was also responsible for part of the harm does not constitute double recovery.

This bill quite remarkably allows a defendant to dictate a plaintiff's litigation strategy. Under existing law, as the author and sponsor are well aware, a plaintiff has the choice of seeking damages through a civil action against a solvent company or filing a claim with an asbestos trust established by a bankrupt company. Where there is more than one tortfeasor, the common law has long permitted a plaintiff to recover from all of them or any one of them. This is the fundamental principle of joint and several liability adopted by this state. If the plaintiff recovers from just one of several tortfeasors, then it is the responsibility of the one who paid the damages to the plaintiff to seek contribution from the other tortfeasors. This principle of "contribution rights" of joint tortfeasors is well-established in common law and codified in the California Code of Civil Procedure. This principle not only recognizes the plaintiff's right to name defendants; it correspondingly makes "co-obligors mutually subject to contribution rights." (Code of Civil Procedure Section 877.)

This bill would not only force a plaintiff who seeks damages from a solvent company to also file a claim with an asbestos trust, it would also dictate the timing of the plaintiff's actions by effectively requiring the plaintiff to identify and file claims with an asbestos trust before bringing an civil action. The author and sponsor apparently assume that the only reason a plaintiff would bring a civil action prior to filing a trust claim would be to fraudulently prevent any trust award from being deducted from the damages awarded in a tort action. However, there are many reasons for a plaintiff to bring a civil action prior to, or even instead of, filing a trust claim. As noted, the asbestos trusts pay far less than the actual amount of damages (sometimes as little as 6% of that amount). A person dying of mesothelioma may reasonably decide to seek a larger and more just amount of compensation before filing a trust claim for a grossly inadequate amount. Moreover, a plaintiff may reasonably sue the company for which there is the most evidence of culpability, rather than filing a claim with a trust that represents a company whose liability may be insubstantial or harder to prove.

Whatever the strategic reason for taking one path over another, or taking one path prior to another, strategic considerations are best left to the plaintiff and the plaintiff's counsel. One of the more striking aspects of this bill is that it allows the defendant to determine the trusts to which the plaintiff must file a claim. That is, in addition to requiring the plaintiff to identify any trust with which the plaintiff may have a claim, the bill also provides that if the defendant identifies a trust which the plaintiff failed to disclose, but with which "the defendant reasonably believes" the plaintiff has a viable claim, then the defendant may file a motion to order the plaintiff to file a claim with that trust. This is quite remarkable premise and result: the defendant's belief that a plaintiff had a claim with an asbestos trust would prevail over the plaintiff's belief that he or she did not have such a claim.

Moreover, if the defendant already knew or reasonably believed that the plaintiff had a basis for a claim with a particular trust, then the defendant could simply ask the plaintiff about those trusts and the companies that they represent during depositions, and then request relevant information about the trusts in discovery, which, according to the GAO, a defendant can already do. (GAO Report pp. 16, 24-28.) Indeed, courts in California have, through case management orders, required plaintiffs to provide information about trust claims that the plaintiff has already filed or any trust claim that plaintiff intends to file. (See LAOSD CMO; see also In Re Complex Asbestos Litigation, Case No. CGC-84-828684, San Francisco Superior Court.)

Contrary to the proponents professed concern about preserving trust assets, this bill would actually increase the number of claims likely to be made against the trusts. The author and sponsor make what appear to be inconsistent claims about the bill's impact on trust assets. Citing a 2016 California Supreme Court ruling holding that household members of exposed workers "could sue asbestos manufacturers and employers," CJAC somewhat confusingly adds that this "expansion creates a new generation of asbestos plaintiffs and puts even more pressure on limited trust funds." This statement is confusing at best. By definition, plaintiffs who sue companies in tort do not put pressure on limited trust funds, because claims awarded in tort actions do not come from the asbestos trusts. To the contrary, had the court denied a household member's right to sue in court, the household member's only alternative would be to file a trust claim with a company that established an asbestos trust and was partly responsible for the harm.

Moreover, if the intent of this bill is to preserve trust assets, as claimed, this bill in fact does just the opposite. This bill would require a plaintiff to identify and seek reimbursement from any trust the defendant (not the plaintiff) "reasonably believes" the plaintiff has a claim. In short, this bill will require plaintiffs to file trust claims that they otherwise would not have filed. This bill, of course, is premised on the assumption that plaintiffs often file post-judgment trust claims (even while denying exposure to the trust company's product in the tort action) only after they have won a full judgment in a civil action. However, even if this assumption is accurate, it is simply inaccurate to claim that civil actions put more pressure on trust assets or that this bill would preserve trust assets. To the contrary, this bill will necessarily increase the number of claims presented to the asbestos trusts; indeed, the intent of the bill is to have plaintiffs recover more from the trusts and less from the sued companies.

The Scope and Purpose of the Veteran's "Super Preference" is Unclear. Although CJAC's letter of support suggests that this bill would create "a 'super preference' for veteran plaintiffs whose lawyers disclose trust claims" [emphasis added], that is not what the text of the bill actually says or does. To begin with, if the veteran's attorney disclosed trust claims, the veteran plaintiff would already be entitled to the preference. More problematically, however, as written the bill's preference for veterans is not tied to the asbestos provision at all. As a stand-alone subdivision within an existing section on trial preferences, the bill says only that, "A party to a civil action who is a veteran shall be entitled to preference ahead of all parties who are not veterans." As a separate subdivision, this provision is not limited to asbestos actions and, indeed, it is not even limited by the subdivision in existing law that allows parties to move for a trial preference due to age or ill health. By placing this language in a new and separate subdivision, the bill simply says that a veteran is always entitled to preference over any other party that is not a veteran. Although it is not clear if this is the author's intent, the bill could be read to mean that a relatively young and relatively healthy veteran would have preference over an elderly and dying plaintiff who is not a veteran, even though the purpose of the preference is to expedite trials in which there is some doubt as to whether a party will survive the anticipated length of the trial. Background information provided by the author and sponsor imply that the bill creates an exemption for veterans to the requirements of this bill; but this is not, in fact, what the bill does.

The evidence of abuse suggested by the Garlock decision is not conclusive. Much (if not all) of the sponsor's evidence of a problem comes from dicta in In re Garlock Sealing Technologies (2014) 504 B.R. 71, a decision by a federal bankruptcy court in North Carolina. As a Chapter 11 reorganization, In re Garlock was an "allowance proceeding" – that is, a hearing to determine a reasonable estimate of Garlock's liability for future and present mesothelioma claims. Garlock produced gaskets containing asbestos. Not only did the gaskets contain the less dangerous form of chrysotile asbestos (as opposed to the more dangerous amosite asbestos), but the asbestos produce by Garlock was "encapsulated" within the gasket, which meant that it was unlike the more free-floating sort that one might find in insulation. While asbestos fibers in insulation can easily become airborne, asbestos in an encapsulated gasket is only released through deliberate scraping of the gasket – something an employee handling or changing gasket would not be likely to do. This is not to say that the asbestos within a gasket poses no risk; it is simply to say that asbestos in insulation poses a much greater risk and is a much more likely cause of mesothelioma than such a product. As a result, the court found that Garlock's culpability would be rather low, and established a relatively low amount of aggregate liability for the company: $125 million.

While the Garlock decision did not involve claims brought through the civil tort system, the bankruptcy court—in its effort to estimate the amount of Garlock's aggregate liability—examined several lawsuits that Garlock had settled prior to trial. The court allowed Garlock to have full discovery against 15 settled and closed cases. As a result of this discovery, the court concluded that Garlock presented "substantial evidence" of a "few examples" in which plaintiffs denied exposure to a bankrupt company's products but then, after settling, made trust claims against some of the same companies. While the court was quick to add that the cases examined "are not purported to be a random or representative sample," it nonetheless found the fact that there was some degree of misrepresentation in all 15 cases to be significant. (In re Garlock, at 85-86.) However, the court also acknowledged that these 15 cases were "just a minute portion of the thousands that were resolved by Garlock in the tort system." Moreover, the court added, in "contrast to the cases where exposure evidence was withheld, there were several cases in which Garlock obtained evidence of Trust claims that had been filed and was able to use them in its defense at trial. In three such trials, Garlock won defense verdicts. In a fourth, it was assigned only a 2% liability share." (Id. at 86.) Indeed, it was precisely because in many cases Garlock did have evidence of other more culpable tortfeasors that the courts concluded that Garlock's overall liability was "relatively de minimus." (Id.; see also Moeller v. Garlock (1011) 66- F.3d 950.)

In short, the Garlock decision does indeed show evidence that some plaintiffs and law firms apparently failed to disclose exposure to trust products and then subsequently filed claims with those same trusts. As a policy matter, however, the relevant question is whether the 15 cases selected by Garlock were representative of the "thousands" of actions brought against the company (or indicated a more widespread problem impacting other asbestos manufacturers in general). The proponents of this bill have not provided any other evidence of abuse or that the 15 cases were representative or that the Garlock issue is reflective of a wider problem. While the background information provided by the author and sponsor contend that "more and more cases are being filed in California that game the claims and overburdened court systems," the Committee is not aware of any evidence that would substantiate that claim. Nor have other entities found such evidence. For example, based on interviews and audits of eleven trusts, the GAO found no evidence of fraud. (GAO Report, p. 23.)

To the extent that there is a problem, there are more effective ways to address it. Garlock is not evidence of a widespread problem; but it certainly does show that misrepresentation that takes advantage of the dual system has occurred. The question, therefore, is whether or not there are means of addressing this problem – whatever its extent – through existing law. There are, in fact, at least three existing mechanisms. First, if plaintiffs' lawyers are deliberately counseling clients to deny exposure to trust products, this is already unlawful, unethical, and subject to sanctions and discipline. Our laws generally do not assume beforehand that all plaintiffs will lie or commit fraud, just as we do not assume beforehand that all defendants will lie or commit fraud. Rather, the law generally provides sanctions when fraud occurs. Second, defendants may use depositions or other existing modes of discovery to elicit information from the plaintiff about exposure to other products. Just as many plaintiff lawyers specialize in asbestos cases, so to do many defense lawyers. Defense lawyers know which trusts have been established and can ask questions about those trusts and pursue other forms of discovery. While proponents of the bill claim that such information is not available through discovery – hence the need for the disclosures required by this bill – the aforementioned GAO Report and the oft-cited Garlock decision show that defendants have in fact obtained such information through depositions, interrogatories, and other forms of discovery.

Third, and perhaps most significant, even if such information were not available through normal discovery, the experience in California shows that courts, through case management orders (CMO), already require plaintiffs to make the disclosures required by this bill. Indeed, the largest counties in the state – Los Angeles, San Francisco, and likely many others – have standard CMOs that require plaintiffs in asbestos suits to provide information about both past and intended future trust claims. Moreover, to the extent that an asbestos trust would not honor a discovery request, the CMO can require the plaintiff to "execute and provide a Bankruptcy Trust Authorization" that would authorize the trust to release documents and information relating to the plaintiff's claim. (See LAOSD Asbestos Cases, Notice of Intent to issue case management order requiring disclosure of bankruptcy trust claims, claimed-related materials, and asbestos exposure facts. Case No. JCCP 4674, Los Angeles County Superior Court, March 5, 2015; See also In re Complex Asbestos Litigation, Case Management Order. Case No. CGC 84-828684, San Francisco County Superior Court, June 29, 2012.)

In short, existing law appears to already provide remedies for the problems alleged by the author and sponsor: attorney sanctions; deposition and discovery; and case management orders. In light of these existing remedies, the Committee may conclude that the problem motivating this bill is not enough to justify new and unprecedented procedural requirements that single out a particularly vulnerable group of plaintiffs.

ARGUMENTS IN SUPPORT: According to the bill's sponsor, the Civil Justice Association of California (CJAC), this bill will "provide transparency and fairness in civil asbestos litigation in California" and "preserve future trust assets." CJAC's primary contention is that the existing two-track system – which allows asbestos victims to bring tort claims against solvent companies and file claims against bankrupt companies that have established asbestos trusts pursuant to federal bankruptcy law – allows plaintiffs to engage in so-called "double dipping." That is, CJAC claims that asbestos victims and their attorneys are obtaining tort judgments from one company for the entirety of the harm and then, once judgment has been entered, filing a claim with an asbestos trust for an additional award. CJAC contends that if the plaintiff were forced to disclose any trust claims, or potential trust claims, at the time of bringing the tort action, the amount owed by the defendant in the tort action would and should be proportionately reduced by the amount to be paid by the trust. CJAC also contends that plaintiffs and their lawyers are, in some cases, deliberately denying knowledge of exposure caused by the trust company so as to make the company sued in court liable for the entire amount. As CJAC puts it, "plaintiff's lawyers can tell one story in the trust system and another in the court system. In a form of 'double dipping,' this lets the attorneys recover from multiple defendants when some of these defendants may not have been responsible for the asbestos exposure or their fault was minimal." Countering the opposition claims that this bill will delay asbestos actions, CJAC contends that the bill will not lead to delay "unless the plaintiff's lawyers choose to withhold disclosure of trust claims."

Finally, CJAC adds that this bill will create a "super preference" for veterans "in recognition of the service they have provided to our country and communities." "Veterans," CJAC writes, "get to the front of the line before non-veteran plaintiffs in securing a court date."

ARGUMENTS IN OPPOSITION: Consumer Attorneys of California (CAOC) opposes this bill because it "is the latest attempt in a decades-long campaign to delay accountability and deny asbestos victims compensation." AB 1056, CAOC contends, "is based on model legislation provided by the American Legislature Exchange Council (ALEC), a group that continually strips consumers of their rights in order to protect its corporate members." ALEC's goal, according to CAOC, is to "delay or deny any form of compensation to dying victims of asbestos-related conditions by shifting litigation costs, reducing the amount of available recovery, and creating excessive burdens on dying plaintiffs." The asbestos industry, according to CAOC, has an incentive to delay these cases because under California law when a plaintiff dies before trial there is no recovery for pain and suffering. In short, the "bad actor defendants who poisoned the victim" will "enjoy a financial windfall because the victim dies awaiting trial."

CAOC raises a number of other objections to this bill. First, CAOC argues that AB 1056 "undercuts existing California policy that allows for dying victims to request a speedier trial when their health is rapidly deteriorating." Specifically, existing law "allows for individuals who are dying to petition the court for a preference that allows them to have an expedited trial." However, AB 1056 amends this provision of existing law "so that in any asbestos tort action a dying plaintiff must meet a number of additional requirements before the court may grant them a trial preference. . . This bill will circumvent [existing law] and allow defendants to perpetually delay the case, despite the plaintiff's rapidly failing health." Second, CAOC contends that the bill is not needed to meet the alleged purpose of "transparency." If defendants believe that a trust should contribute to its liability payment the defendant may obtain information through existing discovery rules and, if appropriate, can seek contribution from the relevant trust. This bill, according to CAOC, would effectively shift the workload and "force the victims to obtain those funds on behalf of the defendants." Third, contrary to the supporters claims that this bill will preserve trust funds, CAOC contends that it will do "exactly the opposite . . . it drain the trusts even quicker [by forcing victims to make a claim] and act as a barrier to fair civil compensation for workers exposed without warning or protection by those who hid the truth of this toxin's dangers since the 1930s." Finally, CAOC contends that this bill is unnecessary because there is no compelling evidence of a problem.

Several labor organizations oppose this bill for substantially the same reasons as those articulated by CAOC.

REGISTERED SUPPORT / OPPOSITION:

Support

Civil Justice Association of California (sponsor)

Opposition

Alice B. Toklas Democratic Club

California Conference Board of the Amalgamated Transit Union

California Conference of Machinists

California Labor Federation

California Professional Firefighters

California Teamsters Public Affairs Council

Communications Workers of America, Local 9421

Consumer Attorneys of California

Engineers and Scientists of California, IFPTE Local 20, AFL-CIO

International Longshore and Warehouse Union (ILWU)

National Lawyers Guild, Labor and Employment Committee

Northern California District Council of ILWU

Professional and Technical Engineers, IFPTE Local 21, AFL-CIO

Sacramento Central Labor Council, AFL-CIO

State Building and Construction Trades Council of California

UNITE-HERE, AFL-CIO

Utility Workers Union of America

Worksafe, Inc.

Several individuals

Analysis Prepared by: Thomas Clark / JUD. / (916) 319-2334