JM Eagle’s racketeering lawsuit against asbestos law firms advances
A federal judge has allowed plastic pipe producer JM Eagle to proceed with racketeering claims against two law firms and several attorneys involved in hundreds of asbestos-related personal injury lawsuits against the company.
The ruling allows the federal racketeering claims to move forward but does not determine whether the law firms or attorneys engaged in wrongdoing.
In a Nov. 6 opinion, Judge Robert W. Gettleman of the U.S. District Court for the Northern District of Illinois denied a defense motion to dismiss claims filed under the Racketeer Influenced and Corrupt Organizations Act (RICO).
The defendants include Alton, Ill.-based Simmons Hanly Conroy LLP (SHC), Chestnut Hill, Mass.-based Sokolove Law LLC and several SHC attorneys.
About 430 of the defendants’ cases filed since 2001 involve asbestos-cement pipe (ACP) products sold from 1983 to 1988 by Los Angeles-based JM Eagle, which was then known as JM Manufacturing Co. Inc.
JM Eagle alleges that SHC used Sokolove as a source of referrals and extracted settlements by pursuing asbestos claims based on fabricated accounts of exposure and scripted testimony identifying the company’s products.
Gettleman’s opinion noted that asbestos-cement pipe remained in use because of its durability and corrosion resistance, and that higher levels of asbestos exposure generally occurred when workers cut or drilled the pipe without appropriate precautions.
JM Eagle has been named in more than 6,000 asbestos lawsuits since 2000, typically brought by people diagnosed with asbestos-related diseases such as mesothelioma, according to the opinion.
For example, one SHC client worked under the table installing sewer ACP throughout Southern California, according to one deposition. But JM Eagle alleges that Social Security records and other evidence showed he was attending high school or working in jobs unrelated to construction during that period.
JM Eagle also alleges that asbestos-cement pipe was not approved for use in Southern California sewer systems during the 1980s.
After about 18 months of litigation, the case was dismissed along with approximately 15 others as part of an agreement, the judge noted.
JM Eagle alleges that the defendants violated RICO by participating in a racketeering enterprise and conspiring to carry out the alleged scheme.
The defendants argued that the claims should be dismissed under the NoerrPennington doctrine, which generally protects the right to petition the government, including through litigation.
But Gettleman ruled that JM Eagle had sufficiently alleged conduct that could fall under an exception for sham litigation and intentional misrepresentations.
“Put simply, genuine petitioning is immune ... sham petitioning is not. This is known as the ‘sham’ exception,” the judge wrote.
The court also declined to dismiss the RICO claims as untimely.
“The court finds that plaintiff has pleaded enough here to avoid dismissal,” Gettleman wrote.
The court did dismiss three state-law claims — common-law fraud, unjust enrichment and civil conspiracy — without prejudice.
A spokesperson for SHC could not immediately be reached for comment.
According to the opinion, JM Eagle became a target of asbestos lawsuits after bankruptcies among manufacturers and distributors of friable asbestos products, such as insulation, shifted litigation toward other companies.
The ruling allows JM Eagle to pursue its racketeering claims against SHC, its attorneys and leaders, and its alleged referral partner, according to JM Eagle General Counsel Lisa Carteen.
“[The court] recognized that litigation conduct is not automatically immune from federal racketeering law when it is part of a scheme built on false testimony and concealed evidence,” Carteen said in a news release.
Carteen said JM Eagle has always defended asbestos claims on their merits.
“Our fight is about restoring integrity to asbestos litigation, so that compensation goes to the people who were truly harmed,” she said.
With estimated annual sales of $3.8 billion, JM Eagle is the No. 1 pipe, profile and tubing extruder in North America, according to Plastics News’ latest ranking. Ashwin J. Ram of Buchalter LLP, also counsel for JM Eagle, said the ruling could have implications for other companies facing what they believe are repeated fraudulent claims.
“The court rejected the argument that a law firm’s litigation conduct can never be racketeering activity and declined to dismiss the case on First Amendment petitioning grounds,” Ram said in the release. “The case now moves into discovery, where [JM Eagle] will be able to examine how these claims were generated, investigated, and brought.”
The defendants must respond to the complaint by Dec. 7.