In a $358 million dollar agreement, which has drawn nationwide attention from insurers and other companies with asbestos liabilities, Garlock Sealing Technologies has agreed to settle all asbestos claims against the company. This agreement was made possible largely because of evidence that lawyers fraudulently inflated judgments and settlements. This development may aid other insurers and companies with asbestos liabilities to dispute similar claims brought by asbestos lawyers.
Garlock Sealing Technologies is a wholly owned subsidiary of EnPro Industries, Inc., which manufactured and developed asbestos-lined gaskets. According to industry publications, the company has spent more than $100 million each year in settlements since asbestos lawsuits started to emerge. Insurers have paid over $1 billion to date, and the company has more than 100,000 cases pending. Garlock filed for Chapter 11 bankruptcy in 2010 as a result of the asbestos claims against it.
The agreement, negotiated with Joe Grier, the court-appointed representative of future asbestos claimants, would see Garlock pay $358 million over 40 years, in settlement of all asbestos injury claims against the company. Opposition to the deal is expected from lawyers for current asbestos claimants. This deal amounts to an approximate present value of $236 million, almost double the $125 million liability estimate provided by U.S. Bankruptcy Judge George R. Hodges in Charlotte, North Carolina in January 2014 (In re Garlock Sealing Techs., LLC, 2014 Bankr. LEXIS 156 (Bankr. W.D.N.C. Jan. 10, 2014)), but only a fraction of the $1 billion that was demanded by plaintiffs’ lawyers.
The evidence put forward by Garlock of cases where asbestos-related illnesses were likely to have been caused by products they did not manufacture was a major contributing factor in Judge Hodges’ $125 million liability estimate. This estimate undoubtedly impacted the final settlement amount, and there is speculation that the estimate has been a contributing factor to the split in ranks between the current and future claimants. Disputes between present and future claimants are often a factor in asbestos settlements because money allocated to current claimants will at some point mean money must be taken from the pockets of future claimants. However, the Garlock agreement is unique in that it is the first time that the current claimants have clearly split ranks with the representatives of future claimants. Without this split in ranks, it is unlikely that such an agreement could have been made because of the large gap between the settlement amount and the amount demanded by the current claimants.
Garlock hopes that the settlement of asbestos claims and their reorganization plan will be approved in 15-34 months.