This NY Times article reports on the unusual order issued yesterday in which a Third Circuit Court of Appeals panel ordered U.S. District Judge Alfred M. Wolin of Newark, N.J. to withdraw from three of the five important asbestos-related bankruptcy cases that are pending in his court. The basis of the order is the appearance of bias.
In a 2-to-1 decision, the 3rd Circuit ordered Judge Wolin to withdraw from overseeing the bankruptcy cases involving W. R. Grace, Owens Corning and U.S. Gypsum. The appellate court will decide later whether to remove him from a fourth case involving Armstrong World.
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 3rd Circuit agreed, holding that such meetings “were flawed because no opportunity existed for their adversaries to know precisely what was said” and what effects might result. The creditors also contended that Judge Wolin had appointed advisers who were not impartial because they represented plaintiffs in the G.I Holdings, Inc. bankruptcy case, and the appellate court noted that two of them had a conflict of interest in the five cases because they represented individuals with asbestos claims against G.I. Holdings.
Asbestos-related personal injury litigation has been controversial for years. Some economists estimate that companies have already paid more than $70 billion in asbestos claims with insurance companies paying one-third to one-half of the total. A RAND Corporation study estimates that there have been 8,400 defendants in thousands of asbestos-related lawsuits over the past 15 years.
Legislation to create a no-fault trust fund to compensate victims of asbestos-related diseases is stalemated in Congress. Proponents of the legislation say that asbestos-related litigation risk has forced more than 70 companies into bankruptcy.