Baron & Budd asbestos memo
The Baron & Budd asbestos memo is a memo in asbestos litigation where it is alleged a prominent plaintiffs' firm engaged in subornation of perjury and a cover-up. The Texas State Bar Association grievance committee dismissed complaints regarding the memo. It is cited by United States civil justice reformers and politicians as an example of ethical problems in the plaintiffs' bar. Accusations about the memo have also arisen in the context of Fred Baron's relationship with former presidential candidate John Edwards.
In 1997, a junior associate at Baron & Budd, P.C., a law firm founded in part by Fred Baron accidentally produced to the defense counsel a twenty-page memo titled "Preparing for Your Deposition." Republican Senator Jon Kyl, a tort reform advocate, called the memo "a startling insight into how asbestos claims are created"; in a Senate Report, Kyl writes that the memo:
- gives clients detailed instructions how to credibly testify that they worked with particular asbestos products. The memo also instructs clients to assert particular things that will increase the value of their claim, without regard to whether those things are true. The memo even informs clients that a defense attorney will have no way of knowing whether they are lying about their exposure to particular asbestos products.
Clients were also instructed by the memo to deny that they ever saw warning labels on product packages. The memo was so detailed and comprehensive that Eugene Cook, a former Texas Supreme Court Justice, said at the time, "With this document, you could almost go down the street, get a homeless person, spend a couple of hours with him, and he would be prepared to testify."
Baron & Budd has admitted that the memo was produced by its employees, but denies that the memo instructs its clients to lie and has argued that statements from the memo have been taken out of context by the press. The firm retained a University of Texas Law School professor, Charles Silver, who wrote an opinion that the firm should not face criminal liability for using the memo, based partly on the affidavit of paralegal Lynnell Terrell who said that she was solely responsible for the authorship of the comprehensive memo and that the memo was rarely used.
However, the Dallas Observer conducted an investigation into the memo and found that "a number of former Baron & Budd employees say that the information and techniques contained in the memo are widely used, even taught to employees" and that the "memo was not truly an aberration, but a written example of how the product-identification staff works at Baron & Budd."
Dismissal of charges
Judge John McClellan Marshall, who first learned of the memo from defense counsel in the case where it was produced, called the memo "scandalous to the community as well as to the profession," and "an affront to the integrity of the judicial system," and referred it to a grand jury for possible prosecution and to a state bar grievance committee.
In response to the affidavits from Baron & Budd's experts, the state bar grievance committee dismissed the charges. The Dallas Observer reported that because of "politics," the local district attorney dropped it, requiring the prosecution to be transferred to the Clinton administration in 1998. Baron & Budd and the Association of Trial Lawyers of America made political contributions to the congressional campaign of the U.S. Attorney's wife, Regina Montoya, and Paul Coggins recused himself from the case as a result; the Dallas Observer quotes critics who say that the Democratic administration soft-pedaled the case, which was never investigated.
Judge Marshall had been re-elected twice without opposition in 1992 and 1996, but in 2000, Baron & Budd successfully targeted Judge Marshall for defeat; the Dallas Observer reports a lawyer close to the case saying that "No judge in Dallas will cross Baron & Budd after what happened in that election. They are scared to death." Local Texas judges blocked civil discovery into the production and use of the memo. Attorneys for private clients who attempted to investigate the memo found that both they and their clients were targeted heavily by Baron & Budd. The defendants agreed to replace the attorneys who had investigated Baron & Budd with new attorneys who would not pursue the matter further. And the Dallas Observer reported that the firm responded to its reporting with "a pattern of intimidation and paranoia such as the Observer has never seen before."
Baron and Budd attorneys gave written instructions to clients on what to say during depositions. The firm produced a document titled “Preparing For Your Deposition.” The document was released into the public from the United States Bankruptcy Court for the Western District of North Carolina as Trial Exhibit GST-1270 in the Garlock Sealing Technologies Chapter 11 bankruptcy case.
On the first page of the document, the firm writes: “The burden of proof is on you, the Plaintiff, to show how you know it was their product you were exposed to.” (Italics are displayed here exactly as displayed in the Baron and Budd document).
On the next page, Budd and Baron writes in a section called Insulating Cement: “Insulating cement was usually a gray powder which came in large 500 or 100lb sacks. Remember to say you saw the NAMES on the BAGS.” (ALL CAPS are displayed here exactly as displayed in the Budd and Baron document). A few paragraphs later, the document directs the Plaintiffs to understand that although several companies made insulating cement, they should focus only on remembering the name of the company that they are suing. “Remember, the names you recall are NOT the only names there were. There were other names, too. They are JUST the names that YOU remember seeing on your jobsites.”
- Refractory cement
- Gun mix
- Pre-cut gaskets
- Sheet gaskets
- Rope packing
- Pipe covering
- Block insulation
- Plastic cement
- Asbestos board and panels
- Joint compound
- Cloth and felt
Towards the end of the document, Baron and Budd writes: “It might help to pretend you are a ‘prisoner of war’ in an enemy camp where you must only give ‘name, rank and serial number’. Answer ONLY the question asked and DO NOT VOLUNTEER any information!” Finally, the document states: “Any other notes, such as what you are reading right now, are ‘privileged’ and should never be mentioned.”
No member of Baron & Budd "has been convicted of wrongdoing, disciplined, or sanctioned" for the use of the memo. But no one ever deposed the paralegal who wrote the memo, her immediate supervisors, or the clients who supposedly were prepared with the memo to testify. Baron does not take the position that these court decisions in his favor "absolutely vindicate that the memo was proper," but he does insist that "the document cannot be evaluated properly without ‘context,’ and points to [Lynnell] Terrell’s sworn statement that she always orally instructed clients to tell the truth and that she never gave the memo to clients without also handing them a copy of a second article that admonishe[d] them to testify truthfully."
Brickman proposed that plaintiff law firms had created an “entrepreneurial model” approach to asbestos litigation. He testified that the model spurred hundreds of thousands of claims that were “manufactured for money”, according to a federal judge. in the Garlock case, Brickman testified via a written statement that Baron and Budd targeted Garlock for litigation because other asbestos manufacturers were already bankrupt. Brickman's testimony also asserted that Baron and Budd’s attorneys suppressed evidence of their clients’ exposure to other non-earlock asbestos products. He wrote: “The evidence presented in Part IV indicates that clients’ recoveries are maximized by plaintiffs’ falsely denying exposures to the products of the bankrupts in responding to discovery, failing to dislose prior trust claim filings as well as the intention to file trust claims as soon as the tort suit is concluded—even in jurisdictions where providing this information is mandated by courts’ case management orders and standard interrogatories.”
Regarding the Garlock case specifically, Brickman testified that Baron and Budd used the litigation screening process to generate "tens of thousands of nonmalignant suits. The Baron & Budd ’script memo’, described infra §27, instructed clients to lie about their exposure to the products of bankrupts and ‘implanted false memories’ with regard to the products to which plaintiffs’ claimed exposure”.
In January 2014, the judge overseeing the Garlock bankruptcy case reduced Garlock’s liability for asbestos exposure from $1.4 billion to $125 million. The judge accused plaintiffs and their attorneys of coming up with the higher $1.4 billion number based on “manipulation of exposure evidence”. According to Forbes, "In a pattern long known to defense attorneys, plaintiff lawyers coach their clients to “remember” working with only products made by the company they are suing, then file claims with bankruptcy trusts alleging other exposures.” Case documents in the Garlock case were originally sealed by the bankruptcy judge. However, the legal news journal Legal Newsline appealed, and a judge overruled, meaning that the case documents had to be released to the public.
In January 2014, Garlock filed Racketeer Influenced and Corrupt Organizations Act (RICO) lawsuits against four plaintiffs law firms. All four firms employ attorneys who used to work for Baron and Budd.
- Walter Olson, "Thanks for the Memories", Reason (June 1998)
- Ramesh Ponnuru, Robber Baron?, National Review Online (15 July 2004)
- Lester Brickman, "On the Theory Class’s Theories of Asbestos Litigation: The Disconnect Between Scholarship and Reality", 31 Pepperdine L. Rev. 33 (2004).
- Additional View of Senator Kyl, Senate Report No. 108-118 at pp. 81-184 (21 Jul. 2003) (reprinting memo in full).
- Lester Brickman, Asbestos Litigation: Malignancy in the Courts, Civil Justice Forum of the Manhattan Institute no. 40 (Aug. 2002)
- W. William Hodes, The Professional Duty To Horseshed Witnesses—Zealously, Within The Bounds Of the Law, 30 TEX. TECH L. REV. 1343 (1999). See also Charles Silver, Preliminary Thoughts on the Economics of Witness Preparation, 30 TEX. TECH L. REV. 1383, 1398-1401 (1999) (discussing forces bearing on the preparation of witnesses in civil litigation, including mass tort cases).
- Julie Lyons, Patrick Williams, Thomas Korosec, and Christine Biederman, "Toxic Justice", Dallas Observer, 13 Aug. 1998
- Thomas Korosec, "Homefryin' with Fred Baron", Dallas Observer, 29 March 2001
- Thomas Korosec, "Bench press", Dallas Observer, 9 Mar 2000
- Julie Lyons, The Control Freak, Dallas Observer, 13 Aug. 1998.
- "Baron & Budd 'Script' Memorandum" Archived 8 April 2015 at the Wayback Machine., Trial Exhibit GST-1270. IN THE UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA Charlotte Division. IN RE: GARLOCK SEALING TECHNOLOGIES LLC, et al., Debtors. Case No. 10-BK-31607. Chapter 11.
- "Expert Report of Lester Brickman, Esq., Benjamin N. Cardozo School of Law" Archived 8 April 2015 at the Wayback Machine., IN THE UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA Charlotte Division. IN RE: GARLOCK SEALING TECHNOLOGIES LLC, et al., Debtors. Case No. 10-BK-31607. Chapter 11.
- Fisher, Daniel (14 November 2014). "Judge To Open Files Supporting Garlock Asbestos Fraud Claims Next Week". Forbes. Retrieved 3 April 2015.
- O’Brien, John (21 January 2015). "Unsealed RICO complaints detail fraud allegations against asbestos plaintiffs firms". Legal Newsline Legal Journal. Retrieved 3 April 2015.
- "The Double-Dipping Legal Scam". The Wall Street Journal. 25 December 2014. Retrieved 3 April 2015.