The appeals ruling involved a class-action suit filed by relatives of alleged asbestos victims who accused BASF and Cahill of a systematic cover-up involving the destruction of key documents involving Engelhard asbestos litigation. Although the case in itself is not injury related, evidence of a cover-up could revive many previously litigated cases and cases in which plaintiffs settled for less than they would have had they attained access to factual information.
A year ago, on September 3rd, the 3rd Circuit Court of Appeals in Philadelphia revived a case that could respawn decades-old litigation, having the potential to initiate thousands of asbestos-related claims. German-based BASF, the world’s leading chemical producer, could face a “Pandora’s Box” of legal liability regarding the $5 billion purchase of New Jersey-based Engelhard Corporation in 2006. Although rejecting parts of a federal lawsuit that was dismissed on procedural grounds by the New Jersey U.S. District Court, the 3rd Circuit ruled last year that BASF and its law firm at the time, Cahill Gordon & Reindel, must answer allegations of a cover-up regarding Engelhard’s talc mining operations that ceased decades ago. In sending the case back down to federal court, plaintiffs’ lawyers believe up to 10,000 asbestos-related claims could stem from a favorable ruling.
The appeals ruling involved a class-action suit filed by relatives of alleged asbestos victims who accused BASF and Cahill of a systematic cover-up involving the destruction of key documents involving Engelhard asbestos litigation. Although the case in itself is not injury related, evidence of a cover-up could revive many previously litigated cases and cases in which plaintiffs settled for less than they would have had they attained access to factual information. In the appeals ruling, the judicial panel wrote that if “they rigged the game from the beginning, how then can calculated false and misleading statements serve the truth-seeking function of the litigation? According to the complaint, BASF and Cahill were not mischaracterizing the facts; they were creating them.”
The first legal case against BASF involving the Engelhard purchase began in 2009, when the daughter of Engelhard scientist David Swanson, Donna Paduano, sued in New Jersey State Court regarding her terminal mesothelioma diagnosis. Paduano never worked for Engelhard, and claims that dust from her father’s clothes and visits to the Engelhard facility caused the condition. In a deposition, Swanson claimed that he was told that “asbestos in trace amounts was found in the talc” that the company mined while working for the company in the 1980s. Swanson also wrote that Engelhard’s legal department told Swanson and other employees to “purge our records.” BASF settled with Paduano before her death. Swanson also died of lung cancer, although he never sought a legal claim for himself.
Despite the death of his plaintiff and Swanson, Paduano’s attorney Christopher Placitella continued to investigate the alleged cover-up. According to Placitella, the cover-up began after a lawsuit was filed in 1979 by the estate of an Engelhard tire worker, blaming the talc for his mesothelioma death. Engelhard settled the case in 1983; however Placitella uncovered a cache of pre-trial evidence that showed that employees were aware that traces of asbestos were found in a Vermont talc mine that the company operated since 1967. That mine was closed in 1983 as well, ending Engelhard’s talc mining operations. As per terms of the 1983 settlement, those documents had remained under seal. Although the district court ruled that BASF and Cahill were not liable for false statements regarding Engelhard due to New Jersey’s litigation privilege, the appeals court stated instead, “New Jersey’s Supreme Court has never recognized the litigation privilege to immunize systematic fraud, let alone fraud calculated to thwart the judicial process.”
For their part, both BASF and Cahill have denied any wrongdoing, as well as Engelhard having repeatedly denied there being asbestos in its talc for decades of litigation prior to its acquisition by BASF. Despite all of the denials, BASF replaced Cahill as its attorneys in 2010, with megafirm Kirkland Ellis now representing the company. BASF spokeswoman Robin Rotenberg said that the company and its attorneys have “expended an extraordinary amount of resources to locate Engelhard documents,” providing “tens of thousands of relevant documents.” The law firm also wrote in a May filing that “Plaintiffs face serious obstacles in attempting to certify a class based on events that took place in thousands of different asbestos cases litigated in different courts and at different points in time by different lawyers.”
University of Michigan Law Professor Eric Gordon says, “There’s no question in my mind that it might cost BASF billions of dollars to put these cases behind them.” Waters, Kraus & Paul attorney Jonathan George, however, believes “there is potential substantial liability by BASF,” but doesn’t see a pricetag over a billion dollars to be realistic. Texas asbestos lawyer Mark Lanier says the average asbestos settlement is around $4 million. Although some plaintiffs have been dropped from the case, it remains pending in New Jersey federal court, with Judge Stanley R. Chessler presiding. The case is entitled Williams et al vs. BASF Catalysts LLC et al.
Bloomberg Business – David Voreacos and Jeff Feeley
Reuters – Georgina Prodhan and Frank Siebelt
Wall Street Journal Law Blog – Peg Brickley