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False evidence charges against asbestos company, law firm reinstated


A federal appeals court has reinstated fraud and fraud concealment claims against a former asbestos manufacturer and its law firm, in a lawsuit in which they were charged with destroying evidence and procuring false information.

The putative class action lawsuit charges that a company later acquired by BASF Catalysts L.L.C., a unit of Ludwigshafen, Germany-based BASF S.E., and New York law firm Cahill Gordon Reindel L.L.P. “conspired to prevent thousands of asbestos-injury victims from obtaining fair tort recoveries for their injuries,” according to Wednesday’s ruling by the 3rd U.S. Circuit Court of Appeals in Philadelphia in Kimberlee Williams et al. v. BASF Catalysts LLC; Cahill, Gordon and Reindel L.L.P. et al.

The case concerns Engelhard Corp., which BASF acquired in 2006. According to the ruling, in March 1984, Engelhard executive Glenn Hemstock distributed a memo directing Engelhard employees to collect for discard documents relating to asbestos-containing talc that had been produced in an Engelhard mine in Johnson, Vermont, from 1967 to 1983.

Engelhard also “manufactured favorable evidence with Cahill’s help,” according to the plaintiffs, including discovery and motions documents, among other evidence, and procured false testimony, said the ruling.

“The scheme worked” against asbestosis victims according to the ruling, with their lawsuits either being discontinued, dismissed or settled based on Engelhard and Cahill Gordon’s “false representations.”

“The scheme collapsed a few years ago” following testimony by a chemist in another case, which triggered discovery into the documents that had been destroyed in the litigation, said the ruling. BASF had destroyed or concealed in the litigation, said the ruling.

“The alleged scheme outlived most of the original plaintiffs,” however. Survivors and successors then filed new litigation, charging the defendants with the fraud and fraudulent concealment claims and with violation of the New Jersey Racketeer Influenced and Corrupt Organizations Act.

The U.S. District Court in Newark, New Jersey, dismissed the litigation, stating the claims were inadequately pleaded or barred by law. A three-judge appeals panel disagreed on the fraud and fraudulent concealment claims. New Jersey’s litigation privilege “often immunizes lawyer and parties from recrimination based on their statements in judicial proceedings, but the privilege has never applied to shield systemic fraud directed at the integrity of the judicial process,” said a unanimous three-judge appellate panel in reinstating the fraud charge.

Similarly, the appellate panel ruled that the fraudulent concealment claim should not have been dismissed. That claim “rests on well-pled factual allegations.”

The case was remanded for further proceedings.

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